Law. Offer and Acceptance - Essay Example

? Law Case Introduction This case is about offer and acceptance. A contract exists when an offer is made by one part and accepted by the other; offer and acceptance makes a contract legally binding. Once the parties have gone through an offer and acceptance under the rules applied, the parties are obliged to fulfill their promises. When the party accepts the offer it is generally assumed that all negotiations have been done and the part unconditionally accepts the offer. Hence, there is no halfway through, either there is a contract or there is no contract at all. In this case, Anthony is the offeror who made the offer and Joyce is the offeree; to whom the offer is made. An offer must give a clear indication that the offeror intends to be bound by those terms as soon as they are accepted by the offeree. An offer may remain open until the specified time has been completed. Anthony told Joyce to respond to the offer within a specified time which was Wednesday mid-day. After that time, the offer would have been terminated. According to the English legal system, other circumstances in which the offer will terminate are rejection of the offer, a counter offer made by the offeree, death of the offeror or offeree and withdrawal of the offer (Schulze, 2007, p. 321). In this case, Anthony has withdrawn from the offer through sending a letter which Joyce received after posting the acceptance. Under the law, withdrawal of the offer must be communicated to the offeree. The withdrawal of an offer is known as the revocation of the offer. The case of Payne v Cave (1789) established the principle that an offer could be withdrawn anytime before it is accepted. There are many rules that apply to the withdrawal of offers. One of the main rule is that the withdrawal must be communicated which means that the offerors must notify the offeree that the offer is revoked (Young, 2009, p. 87). This rule was established in the case of Byrne & Co v Leon Van Tienhoven (1880) in which the defendants were a company based in Cardiff. They posted a letter on 1st October to New York making an offer to sell 1,000 boxes of tinplates to the plaintiffs. When the plaintiffs received the letter, they accepted it by telegram. However, in the meantime, the defendants wrote another letter to revoke their offer but the letter was received by the plaintiffs later. The court held that a binding contract existed between the two parties as revocation would only take place on communication but acceptances take place as soon as they are posted. Anthony posted his revocation by post and it was received by Joyce after posting the acceptance. This means that the offer had not been revoked and Anthony was still under the circumstances of the offer and must be fulfilling his promise despite the losses it would cause to him. Thus, the offer has not been revoked because acceptance was already posted. If the acceptance would not have been posted by Joyce, the offer could have been revoked because the specified time given for the offer was still valid. Thus, an offer has been made and accepted as well. An offer is revoked only if the revocation is communicated to the offeree but the acceptance is made as soon as it is posted. The contract law establishes that acceptance of an offer is when the offeree has unconditionally accepted to all terms of the offer. Acceptance can be oral or in writing, but at times acceptance can be done by an act such as delivering goods in a response to the offer. Acceptance does not take effect until it is communicated by reasonable means. Lord Denning explained this principle in Entores Ltd v Miles Far East Corporation (1955) that if A shouts an offer to B over a river and just as B shouts back in acceptance, a noisy aircraft flies over and prevents A from hearing B’s acceptance, no legally binding contract is made. This means that A must hear the acceptance of B only then will it be called communicated (Schulze, 2007, p. 321). However, there are some exceptions to this communication rule. One of the exceptions is the postal rule, which applies in Anthony’s case. The rule for acceptances made by post is that they take effect when they are posted, not when they are communicated. The reason for this rule is historical and it dates back to the time when communication through post took many days and sometimes months as well, and was also less reliable. Even now, there is some practical purpose for the rule, in that it is easier to prove that a letter has been posted rather proving it has been received. This was established in the case of Adams v Lindsell (1818). The postal rule has two main consequences. Firstly, a postal acceptance will take effect when it is posted, even if it gets lost in the post and doesn’t reach the offeror. This was established in Household Fire Insurance v Grant (1879). Secondly, where an acceptance is posted after the offeror posts a revocation of the offer, but before that revocation has been received, the acceptance will be binding because posted acceptance takes effect on posting while posted revocations take effect on communication. This point was illustrated in Byrne v Van Tienhoven (1880) and Henthorn v Fraser (1892) (Young, 2009, p. 87). Thus in Anthony’s case, it is clear that before the revocation was communicated, the acceptance was posted. This proves that according to the postal rule, an offer had been made and an acceptance has been posted which makes a legally binding contract between the two parties. Anthony shall now act according to the contract and supply the full range of ladies evening wear to Joyce at ?350 per piece. Anthony further went to Taz and made an offer to him. Taz agreed there and this means that an acceptance was made to an offer. Anthony had offered the price of the garments and promised a reasonable date on which the garments would be delivered. This means that he had made an offer with consideration, and Taz accepted it then and there. Face to face offer and acceptance was made and according to that Anthony is now under a binding contract. Anthony must fulfill his promise and deliver the garments on the due date. Anthony has made another offer to Taz overruling the first offer but this is not valid under the contract law. Another offer or negotiations cannot be done now as the offer has been made and accepted. The offer was presented validly and the acceptance was communicated face to face, hence both the parties are legally bound to each other. Any negotiations must be made at the time of the offer and until the offer is valid. Thus, Anthony is in a binding contract with Taz. When offerors fail to carry out the contracts by backing out or not performing their duties, the contract law remedies step in. if Anthony has failed to perform under his contract, Taz can go to the court and demand for remedies for the financial loss. Damages are a general remedy which is for the breach of contract. It would generally be an amount of money which would be a compensation for the loss that the innocent party faced because of the breach. Damages for breach of contract are available as of right where the contract has been breached. The general rule is that innocent parties are entitled to such damages as will put them in the position they would have been in if the contract had been performed (Young, 2009, p. 87). Pecuniary loss is damages that aim to compensate the innocent party for their financial losses that result from not receiving the performance bargained for. This is the case with Taz as he has suffered financial loss because of the breach of contract by Anthony. However, there are some limitations on awards of damages. Causation is where the person will only be liable to pay for the losses caused by the breach of contract. The defendant’s breach need not be the sole cause of the claimant’s losses, but it must be an effective cause of the loss. It is not enough if the breach merely provided the claimant with the opportunity to sustain loss. Intervening acts between the breach of contract and the loss incurred may break the chain of causation. Those events which were reasonably foreseeable will not break the chain of causation. Sometimes a loss can be caused partly by a breach of contract and partly by some other factor. The general rule is that where breach can be shown to be an actual cause of the loss, the fact that there is another contributing cause will not prevent the existence of causation (Andrews, 2011, p. 65). If this rule will be applied to Anthony’s case, it can be seen evidently that the breach of contract was not the sole reason or the loss caused to Taz. Although the breach of contract was an important cause which had an effect on the losses, but Taz was also partly responsible for taking orders in advance before the delivery of garments was done by Anthony. This means that Anthony cannot be legally bound to pay Taz the financial losses that he suffered. However, this does not mean that there is no contract and no breach is done. A contract was there and Anthony breached it thus the court will give some remedy. In Anthony’s case, the equitable remedy of specific performance will be applied. An order for specific performance is a court order compelling someone to perform their obligations under a contract. As we have seen, the common law will not force a party in breach to perform except where the performance is simply paying money, even though it may seem a fairly obvious solution to many contract problem. The equitable remedy of specific performance does compel the party in breach to perform (Andrews, 2011, p. 65). The court can give an order to Anthony to perform according to the contract which was initially made between them. The court will put both the parties in their pre-contractual term as if the breach never happened. This would allow the parties to perform their contract adequately and fulfill their promises. Anthony will have to deliver the garments to Taz in the price originally offered and the second offer will be terminated. Taz cannot claim for the financial loss as that loss is not the direct result of the breach. References Schulze R. 2007. New Features in Contract Law. UK: sellier. European law publishers Young M. 2009. Understanding Contract Law. NY: Routledge Andrews N. 2011. Contract Law. UK: Cambridge University Press Read More